Palma, André de (contributor); Proost, Stef (contributor) - 2004
labour market diversities are very large compared
to congestion ( µ
d
>> Λ
d
and µ
w
>> Λ
w
). Second, when congestion costs … have defined c =
c
1
+α
h
t.Thismeansthatthefirm bears directly, via the intermediate delivery
cost, part of the congestion … costs it creates. Using the market clearing condition,
the profitofFirmi is
eπ
i
(w
i
,w
−i
,p)=
£
g
i
(w
i
)−w
i
−c−Λ
h
P
w …